With regard to Business Meal and Lodging Expenses[i], a new amendment has been introduced in the LIRPF (income tax law) in order to avoid controversy over the law. The amendment establishes certain requirements to be met when deducting meal expenses and limits the amount deductible.
In order for meal expenses to be deductible, the following conditions are required:
- The meal expenses must be the taxpayer’s own
- The meals must be carried out during business activities that fall under the Direct Estimate Tax Regime.
- The meals must take place in a catering or restaurant facility.
- The expenses must be paid for using a method of electronic payment.
The expenses must be justified with a corresponding invoice and proof of their connection with the business activity. The correlation with the income of the company must also be evident. That is to say: enough evidence has to be provided to give the general appearance that these expenses are part of the development of the activity, such as: proof that the meals have taken place during working events and not on non-working days.
There are daily limits to the amounts that may be deducted as Business Meal Expenses, the amount of which depends on the following factors:
- When the expenses involve an overnight stay in a municipality other than the place of work or residence of the beneficiary, the maximum deductible amount will be 67 euros per day, if the expenses occur in Spain, or 48.08 euros per day in a foreign country.
- When spending the night outside the municipality of the place of work or residence of the beneficiary, the maximum deductible amount will be 34, when taken place in Spain, and up to 91.35 euros per day when occurring abroad.
Bear in mind that the limit of these deductible expenses from the IRPF taxes will also have an impact on the deduction of input VAT: the deduction of expenses borne on meals is only allowed when the expenses are deductible from the IRPF taxes.
To give an example: in case of having an invoice of 30 euros, plus the corresponding VAT of 10%, for a business meal that has taken place in Spain and without having spent the night in a municipality other than the place of work or residence, the deductible amount will be
26, 67 x 0.10 = 2.67 euros (being 26.67 the maximum amount deductible).
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[i] Gastos de manutención